TouchBistro, which sells point-of-sale (POS) technology to restaurants, has been acquired by fellow Canadian firm Harris Computer, a subsidiary of Constellation Software.
The news: TouchBistro had raised hundreds of millions worth of venture capital (VC) funding and debt from big-name investors to bring its POS and restaurant management software and hardware to market. Ottawaâs Harris quietly announced its purchase of the Toronto company on July 7. Harris portfolio leader Jean-Pascal Gagnon told BetaKit that TouchBistroâs entire 300-person team is joining Harris, which plans to continue investing in the business. While the financial terms were not disclosed, The Globe and Mail reported that Harris paid $100 million for TouchBistro, marking a âsignificant capital lossâ for investors and leaving employees with essentially nothing for their common shares.Â
From the source: âFounding TouchBistro and taking a back of the napkin idea and growing it to over 25,000 venues and hundreds of employees was the highlight of my career,â TouchBistro co-founder and former CEO Alex Barrotti wrote to BetaKit. âI was saddened to hear the direction the company took after I left not only for our customers but mostly for the hundreds of employees who got screwed by this deal!â
Ex-TouchBistro chair and CEO Samir Zabaneh, who replaced Barrotti in 2021, shared a contrasting perspective: âThe company needed scale, and based on all available options, this is the best outcome if we were to exit this year,â he told BetaKit, asserting that Harris will be âan excellent owner.â
Following the thread: Founded in 2011, TouchBistro faced stiff competition from US-based market leader Toast. It also faced challenges stemming from the COVID-19 pandemic, a pullback in VC funding amid rising interest rates, and fears of an AI-driven SaaSpocalypse. Zabaneh, who has since transitioned to COO of Nuvei, said TouchBistro also suffered from a âmassive declineâ in tech market valuations, citing Lightspeed Commerce and PAR Technology as examples. According to The Globe and Mail, during Zabanehâs tenure, TouchBistro cut spending and staff, saw its revenue growth slow, and dropped from 23,000 to 16,000 restaurants. The company also rebuffed takeover enquiries that valued the business at hundreds of millions of dollars, ahead of a major recap by lender Francisco Partners last year, The Globe reports. The Globe also reported that TouchBistro had previously raised $270 million in VC funding and was generating approximately $70 million in annual sales.
Final thought: TouchBistroâs situation is not entirely unique. Other high-growth, unprofitable VC-backed Canadian tech companies are also facing down stagnant growth, a tough fundraising market, and a rapidly shifting software landscape thanks to AI. At the right price, Constellationâan acquisition machine that charted plans to buy up such firms back in 2024âcould also be an off-ramp for others.
UPDATE (07/14/24): This story has been updated to include comments and information from former TouchBistro CEO Samir Zabaneh and Harris portfolio leader Jean-Pascal Gagnon.
Feature image courtesy TouchBistro.